NASIM HASAN SHAH, J.--This order will govern Civil Petitions Nos. 282/1977, 283/1977 and 284/1977, as a common question of law arises in the said matters.
2. Briefly stated the facts of the case are that the assessee is the owner of a Bungalow No. 25-A, Satellite Town, Rawalpindi. On the 9th of June, 1966, the assessee entered into an agreement with the United States Embassy in Pakistan to lease this property for the consideration of a monthly rent of Rs. 5,030 with effect from 30-6-1968.
3. On the 30th of June, 1966, the assessee executed a Deed of Settlement whereby the entire rental income of the aforesaid Bungalow No. 25-A, Satellite Town, Rawalpindi, was settled in favour of his wife, to daughters and a grandson. The deed was irrevocable from the date of its execution and the benefit was to be available to the beneficiaries for a period of seven years.
4. On the basis of the settlement, deed, the assessee claimed that the income arising from the property had been settled in favour of the four beneficiaries under the deed of settlement dated 30-6-1966 and that the assessee derive no direct or indirect benefit from the said settlement.
5. By an order; dated 3-3-1970, the Income-tax Office 'C' Circle Rawalpindi rejected the above claim of the assessee and included Rs.42,289 in the income of the assessee. Similar orders were passed by the Income-tax Officer for the Assessment years 1967-68 and 1968-69.
6. The appeals filed by the petitioner before the Appellate Assistant Commissioner against these orders, as also the further appeal filed before the Income-tax Appellate Tribunal were rejected whereupon the petitioner's three applications under subsection (1) of section 66 for referring the following questions for decision by the High Court:-- (1)Whether on facts and in the circumstances of the case the order of the learned Appellate Tribunal that as the lease-deed (dated the 9th of June, 1966) was executed by the assessee after the assignment of income by the Deed of Settlement, dated 30-6-1966 is not vitiated as being unsupported by evidence and being the result of misreading of the evidence?
(2)Whether on facts and in the circumstances of the case the learned Appellate Tribunal was right in holding that the assessee was not entitled to exclusion of the rental income of Rs. 42,289 under the third proviso of section 16 (1)(c) of the Income-tax Act, 1922 and the same was not chargeable in the hands of the beneficiary under the Deed of Settlement, dated the 30th June, 1966.
7. The reference applications were registered as T . R . No. 90 of 1971. T . RNo. 91 of 1971 and T . R . No. 92 of 1971. These references were heard and disposed of by order, dated 23-2-1977 passed by a Division Bench of the Lahore High Court (consisting of Mr. Justice Shamim Hussain Kadri and Mr. Justice Gul Muhammad Khan). The learned Judges of the Lahore High Court answered the first question in the affirmative while the second was answered in the negative. However, after having thus answered the to 'questions posed for consideration before them, the learned Judges proceeded further and made the following observation: - "We find that the order of the Income-tax Appellate Tribunal suffers from errors patent on the face of the record such as: (a)The Tribunal incorrectly stated that the lease-deed was executed after the assignment. As stated in para. 2 of this opinion the lease-deed had been executed on 9th June, 1966, whereas the assignment was effected on 30th June, 1966.
(b)I did not apply its mind to the genuineness of assignment or validity of the disposition or settlement though the Income-tax Officer and the Appellate Assistant Commissioner had specifically held that the deed of assignment was not valid for not having been properly stamped and registered.
(c)It did not consider the finding of the Appellate Assistant Commissioner that the amount of rent though received and deposited by the assessee in the joint account of the beneficiaries had been utilized for his personal expenditure.
We would, therefore, allow these applications and answer question No. 1 in the affirmative. As we have found that the Tribunal did not apply its mind to the questions of law and fact before it, our answer to the second question is in the negative. The Tribunal shall, therefore, reconsider the appeals of the assessees on merits after hearing the arguments and points raised by the learned counsel for the parties. We have refrained from giving any finding in this case on the legal points raised by the learned counsel for the parties lest their case might be prejudiced before the Tribunal. The petitio6er is entitled to his costs from the respondent."
8.Leave to appeal has been sought against the above order by these petitions.
9. It is submitted that the impugned order is not warranted inasmuch as though the question No. 1 has been answered in the affirmative yet in para. 7 of the order it (the High Court) has observed that there is an error patent on the face of the record in assuming that the lease-deed had been executed after the assignment while, in fact the lease-deed was executed on the 9th of June, 1966 whereas the assignment was effected on 30th June, 1966. In the context of this inequivocal finding, the plea of the learned counsel for the petitioner is that the answer to question No. 1 could only be given in the negative. The contention therefore, is that in the context of the findings recorded by the learned Judges of the High Court their decision to answer question No. 1 in the affirmative is inconsistent with its own findings.
10. It is further submitted that the petitioner has been taken by surprise and prejudiced on account of the questions being referred back for considering an aspect of the case which was neither raised nor discussed at the the of hearing.
11. It is also argued that the learned Judges of the Lahore High Court failed to appreciate that the jurisdiction they were exercising was a special statutory jurisdiction of an advisory character, which is limited to considering and answering the question raised and referred to them. In this connection, reliance is placed on the judgment of the Privy Council in Raja Bahadur Sir Rajendra Narayan Bhaj Deo v. C.I.T. Bihar and Orissa (1940) I.T.R. 495, which has been relied upon by this Court in Muhammad Idrees Barry v. C.I.T. PLD 1959 SC(Pak.) 202, C.I.T. v. Dinana Engineering Co.
(1953) I.T.R. 613 and Petland Turkey Dye Works Co. Ltd. v. C.I.T. (1963) 48 I.T.R. 92.
12. It is lastly submitted that the learned Judges failed to appreciate that the Income-tax Tribunal has no jurisdiction to allow further evidence or re-hear and examine matters on which matters its order has become final by virtue of the fact that no reference against them was filed before the High Court. Reliance in this behalf is placed on the decision) in C . I . T . v . Scindia Steam Navigation Co. (1961) 42 I . T . R . 581, 609-10 and the case of New Jehangir Vakil Mills Ltd. v. C.I.T. (1959) 37 I.T.R. 11, 20.
These submissions require further examination.
Leave to appeal is accordingly granted.
Security for costs in each case will be furnished in the sum of Rs.1,000.